Fashion Tech Meets the Investors NYC - A Breakfast Discussion
Updated: Dec 21, 2018
The fashion industry is in need of a technology revolution.
Music, banking and transport (to name just a few) have been transformed by technology. But fashion is still clinging to traditional way of doing things, especially when it comes to bigger brands, who seem to be highly technophobic.
To discuss technology’s current and future role in the fashion industry, last month my team at HVO Search and I organised a breakfast at the CORE: Club in New York City with some of the most exciting fashion-tech startups and investors in New York (please refer to the end of the article for a comprehensive list of attendees).
The discussion touched on key issues facing fashion tech startups, how they are challenging the traditional fashion industry and who will be the winners of tomorrow.
WHAT ARE THE KEY ISSUES FACING THE FASHION INDUSTRY AND HOW CAN TECHNOLOGY OFFER A SOLUTION?
Maxine Bédat, co-founder of Zady, points out a problem that many fashion companies have: figuring out what will actually sell. Unlike other industries, which often use data and analytics to influence the development of their products, the fashion industry, she says, operates mainly with “guesswork”.
But this doesn’t need to be the case. Zady, for example, are working on, as Maxine puts it, “integrating technology before a product becomes a product”. Technology – especially data and analytics – can help brands find out what their customers want, and allow them to tailor their products to these needs.
Jamal Motlagh, CEO and co-founder of Acustom Apparel, adds that,
“big companies haven’t done much to change up until very recently”.
Now, however, consumers are used to browsing and shopping online, and to keep up with consumer preferences, the big fashion brands will have to pursue technological solutions. And one of the biggest demands consumers have is for customization.
“If I pick up your iPhone, how it’s set up and how to navigate it is probably totally different than my iPhone; even though they’re the same product, yours is designed specifically for you.”
Similarly, when you get a coffee,
“it’s not [just] a coffee, it’s a double whipped, no foam, half-caf – and how I consume my news is probably totally different to how everyone else consumes their news here”.
Technology, then, can provide a way for fashion companies to allow their customers more freedom when it comes to customising the products they wish to buy – and this is something consumers appear to want.
“some pockets of retailers and designers who are really taking a further step into [fashion technology]. Burberry is at the forefront of fashion houses when it comes to taking a forward motion toward fashion technology and this has paid off in spades”.
Katherine Prime, VP of Operations at Spring, raises the point that technology isn’t restricted to fashion companies’ front-end interfaces, but should be used, “especially for the larger brands”, to “augment” their “unsexy” back-end systems, too – inventories, databases, supply processes, etc. As an example, many big companies, she says, are
“very much tied […] to back-end […] supply chain systems that don’t support fast, reactive personalised experiences.”
But technology can be used to help firms make these more efficient and in tune with what consumers experience from other industries. And this is something that some big firms are starting to understand.
It seems technology is starting to challenge fashion to become more consumer-orientated and efficient. As Maxine says, though some of the big brands she’s spoken to
“have no idea what they’re doing […] they’re very quickly trying to catch up”.
HOW IS YOUR STARTUP CHALLENGING OR SUPPORTING THE TRADITIONAL FASHION INDUSTRY?
Tadd Spering, CEO and Founder at Stylinity, states that his organisation is both a challenger and a collaborator. Fashion brands, he says, “want to change incrementally”, and so revolutionary offerings are unlikely to get taken up immediately. In fact, this was exactly the case for Stylinity, whose first offering was seen as “too innovative”. This led the company to focus instead on
“offer[ing] [fashion companies] tools to do what they already do, just better”.
This makes them a collaborator since they are working with fashion brands; however, the company is also disruptive insofar as they are still “challenging them to improve on the existing paradigm”.
Jamal adds that his own company “inverts and challenges” the way the fashion industry operates. By focusing on digital “experience and interaction”, his company is adding and building on a dynamic previously relatively unseen in the fashion industry. Until recently consumers would simply have to buy what they were presented with, but now they have the option to modify their purchases before they have even been shipped. Such a level of personalization is an alien concept to the fashion industry, and one that will challenge how they operate on a very fundamental level.
Katherine sees Spring as both a collaborator and disruptor “depending on what companies you look at in the retail industry”. Companies who choose to work with Spring each have “a dedicated person at Spring to support them [and] help them innovate.”
However, in “the overall industry”, Spring is a disruptor, since it is changing how some companies operate. Rather than partnering with a fellow fashion company, Spring offers fashion companies a technological collaboration.
“[Spring] is a technology business – very much so.”
With engineers making up 50 percent of the team, Spring supports brands by providing innovative tech solutions – not fashion advice.
HOW DO YOU MAKE FASHION MORE DIGITAL?
Sales of clothing online make up are only 10% of the total spend. Which is not surprising to Yao Huang, founder of The Hatchery who points out that
“70 percent of clothes are not digitised”.
Seth Porges, co-founder of Cloth, argues that the reasons are because people like to try clothes on and because access to reviews for clothing is very poor. Unlike other products, people don’t tend to review clothes, and reviews are important when it comes to making online sales.
Heather Marie, co-founder of Shoppable, adds that
“consumer discovery has changed dramatically”. [A lot] of what [fashion tech] companies are doing is building technologies that help retailers adjust to this. Two hundred years ago [you] didn’t know a product existed unless you went in to a store. One-hundred years ago we had the first catalogue [...]. Fast-forward to today, the digital age, and we’re surrounded by products all around us – from where we are right now, to being on the subway, on Instagram, and blog sites and magazines.”
Consumers are inundated by products, some of which they may want to purchase. “Retailers have always been set up as destination sites”, or places people go in order to get a product. But with people discovering products in so many different ways, the question is how can we make products purchasable wherever people find them?
If we can achieve this, then more people may start to shop online, since they will be able to purchase what they like instantly. And this is just what Shoppable is attempting to do.
All guests agree that to sell more clothes online the digital customer experience needs to be enhanced.
As Seth says - the impeccable customer service (partcularly of the standard found at luxury retailers) is almost completely missing on digital channels. Fashion tech needs to find a way to
“maximise impulsivity in-store whilst also, in a mobile setting [maximise] the level of service and personalisation customers receive.”
Currently Cloth is working with a number of retailers in order to integrate “their existing in-store resources” (personal shoppers, stylists, etc.) with their mobile channels, allowing “their existing [mobile] customers to access them.”
Maxine adds that fashion tech needs to think about how you can make e-commerce into a “really wonderful” experience. Buying clothes, she says, “is an emotional experience”. What brands need to do is find a way to
“integrate this emotional layer with the tech”.
Apple is a good example of making the purchase of consumer technology, traditionally a non-emotional purchase, emotional.
Howard Morgan, co-founder and partner at First Round Capital, points out that physical stores offer “instant gratification” – you see something, you need it, and you buy it, right there and then. To enhance digital channels, it is crucial to find a way to incorporate this instant gratification online.
Tadd's business Stylinity is trying to do exactly that. At the moment, they are "making the second season of Stacy London's show, Love, Lust, or Run, shoppable." As she helps people improve their style on TV, those looks are shared with a social audience who can buy those products online.
Tadd says that
"Connecting the dots for shoppers on social media between inspiration and purchase, whether they're following a brand, retailer, or TV show, removes friction in the path to purchase."
That's true on any platform - Instagram, Facebook, Pinterest, Twitter, et al, and helping followers get what they want when they want it "drives conversion."
WHO WILL SURVIVE A FASHION TECH REVOLUTION? AND WHO WON’T?
Fashion tech has the potential to revolutionise the way the fashion industry operates. Those who are trying to stay ahead of the curve, and control fashion tech in their own labs and incubators, such as Macy’s (who, as Howard points out, has its own venture capital group and lab) have the highest chances of survival.
Sumeet Shah, senior associate at Brand Foundry Ventures, claims that forward thinking companies, such as Nordstrom are likely to last, whereas traditional companies, such as Lord & Taylor, may struggle due to their unreceptivity to new ideas. And he adds that some of the smaller retailers “are going to get wiped out”, since their failure to keep up so far may be hard to reverse with comparatively few resources.
Weston Gaddy, senior principle at Bain Capital Ventures, says that
“the idea that […] a multi-brand retailer can simply be a merchandiser and inventory holder is going away. That idea that your whole value add is bringing together a bunch of curated merchandise into four walls and expect[ing] customers to come to you [...], that middleman capability that empowered the last generation of retailers, is going away.”
Nowadays, you can find brands online, where they’ve established their own presence, leaving many big firms “scrambling to find ways to stay relevant”. The upshot is that brands that have a way to directly “touch” their customers are going to do very well. However, big department stores and multi-brand retailers are inevitably “going to see their margins come down.”
Katherine, however, says that
“small brands can win in [today’s environment] because they are flexible and responsive”.
Larger, more established brands are likely to be tied to particular ways of doing things. Breaking down and re-building these systems requires a huge amount of effort and an equal amount of investment. Whilst this is possible, new brands who are yet to consolidate their processes may find it much easier to adapt to new technology. This will give them a competitive edge.
So who do you think will be the winners in the fashion tech revolution?
The small players that have flexibility and dynamism on their side? Or the big retailers, that already have the customer base, existing channels and money to allow them to make changes through nurturing and partnering with promising fashion-tech startups through their own schemes?
We are excited to find out - so watch this space!
Alex Semenzato – Founder, FashTech
Alex is the founder of Fashtech, an exciting new venture which aims to drive creative partnerships between fashion and technology startups and provide a platform for the latest innovations to be showcased. In addition, Alex is also the Head of Market Development at Cortexica, the leading provider of visual search for the fashion industry.
Heather Marie – Co-Founder, Shoppable
Heather is the founder and CEO of Shoppable. Shoppable is a premium affiliate marketplace and patent-pending universal checkout out that makes any website or mobile application instantly shoppable. The company allows consumers to shop any brand and product from anywhere in the world. Heather has won a whole host of awards and accolades, and has previously held senior positions at numerous renowned organisations. She’s also a board member at the San Francisco Opera.
Howard Morgan – Co-Founder and Partner, First Round Capital
Howard is an angel investor and the co-founder of Venture Capital firm First Round Capital. He is a contributing writer for Business Insider and also serves as a board member at Idealab. Howard is passionate about entrepreneurship, and thrives on building a vibrant community of technology entrepreneurs and companies.
Jamal Motlagh – CEO and Co-founder, Acustom Apparel
Jamal co-founded Acustom Apparel, a digital tailor that allows consumers to buy fitted clothing online. Using 3D technology, Acustom Apparel’s users are able to see themselves in outfits of their choosing without leaving the comfort of their house. Jamal has worked at companies including Microsoft and Goldman Sachs, and has played water polo professionally.
Katherine Prime – VP of Operations, Spring
Katherine is the VP of Operations at Spring, a shopping app that allows users to shop over 700 brands from one platform; follow brands to find out about the latest arrivals, exclusives, and sales; and explore collections curated by leading influencers and editors. Spring was named by Vogue, Refinery29, InStyle, Forbes, and many more, as one of the best shopping apps available. Prior to joining Spring, Katherine worked at Quidsi and AOL – where she launched the StyleList Blog network and oversaw Huffington Post Style.
Maxine Bédat – Co-founder, Zady
Maxine, a Doctor of Law, is the co-founder of Zady. Zady seeks to provide environmentally conscious consumers with high-quality clothing, so that they remain satisfied for longer and reduce their contributions to the over-consumption of clothes. Maxine has previously worked in law, and is co-founder of The Bootstrap Project.
Seth Porges – Co-Founder, Cloth
Seth co-founded Cloth, an iOS app that makes it easy to shoot, categorize, and share your favourite outfits. Featured by The New York Times, Vogue, Wired, Gizmodo, Mashable, MTV, and more, Cloth is now working with retailers to take their core pieces of technology, and integrate them directly into retailers' products in order to drive engagement and sales. Before Cloth, Seth worked as a television contributor, writer, and editor.
Sumeet Shah – Senior Associate, Brand Foundry Ventures
Sumeet, a senior associate at a new venture capital firm Brand Foundry Ventures, handles deal sourcing and is responsible for established partnerships and relationships with other venture capital firms, incubators, private equity firms, and startups. Sumeet has held various senior positions at various companies in a variety of industries.
Tadd Spering – CEO and Founder, Stylinity
Tadd founded Stylinity, a suite of easy-to-use services that offer brands a complete Shoppable Content Management System. The app makes social media shoppable, eliminating friction in the path to purchase and allows for the creation, sharing, tracking, and analysis of shoppable content across Instagram, Facebook, Twitter, Pinterest, and more. Stylinity has been featured by the likes of Forbes and CNBC.
Weston Gaddy – Senior Principal, Bain Capital Ventures
Weston, a senior principal at Bain Capital Ventures, focuses on investments in early-stage companies. Prior to joining Bain Capital Ventures, Weston worked as a strategy consultant for media, financial service, and consumer product clients.
Yao Huang – Founder, The Hatchery
Yao is the founder of The Hatchery, a venture collaboration forum that builds community entrepreneurs, emerging companies, and investors. The Hatchery is active in 10 companies around the world. Yao has worked previously as a Venture Partner, and co-founded Gigapixel Creative in 2003.
Maria Hvorostovsky – Director and Founder, HVO Search
Maria’s exceptional talent network, coupled with her entrepreneurial spirit, led to the creation of HVO Search in 2012. Based in the heart of London, HVO Search is the provider of bespoke executive search and intelligence services to global clients within digital, retail, consumer and technology industries.